Building a company that will prosper in the long term isn't just about cutting fuel consumption and saving energy, says Dale Rogers. It's also about ethics, social responsibility, and environmental stewardship.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
Sustainability is about a lot more than saving energy, says Dale Rogers.
It's also about adopting business and supply chain practices that ensure a long life for a company, argues Rogers, who is professor of logistics and supply chain management and co-director of the Center for Supply Chain Management at Rutgers University. And it involves practices that pay off not only in building a reputation for corporate good citizenship, but in long-term prosperity.
Perhaps best known for his research on reverse logistics, Rogers has turned much of his attention to the topic of sustainability in recent years. At his former post at the University of Nevada-Reno, he led a major research project on sustainable supply chains, work that he is continuing at Rutgers. Rogers is currently writing a book on the topic with a former University of Nevada-Reno colleague, Craig Carter (now at Arizona State). In a nod to Philip Crosby's classic text Quality Is Free, Rogers and Carter have given their book the working title "Sustainability Is Free."
Rogers says his interest in the topic was sparked by a conversation with a Hewlett-Packard executive during a plane ride to a reverse logistics conference. She told Rogers that she was attending the conference as part of a broader effort to make H-P a sustainable company.
"I knew by the end of the ride that I had to write a book about this," he says. "It is safe to say this is a big idea."
Although companies often equate sustainability with energy conservation, that's just a small part of the picture, Rogers says. "It is not just a green, environmental movement. It is about being ethical and honest. It is about how to make something last for a long time. It's about increasing productivity, getting more out of what you are doing, and using fewer resources—particularly non-renewable resources. It is really about looking at things from a holistic point of view and not just for the short term."
Social responsibility comes into it as well, he says. "Part of sustainability is doing the right thing by the people in your company," Rogers says. Among other things, that includes ensuring good working conditions and promoting employee safety and wellness.
Dale Rogers explains the importance of reverse logistics as part of a sustainable supply chain
Showing the way
As for where the sustainability movement is headed, Rogers says adoption will likely be more evolutionary than revolutionary. It took time to bring Corporate America on board with the quality movement, he says, and it will probably be the same with sustainability. Nonetheless, he expects to see sustainability widely incorporated into supply chain processes and strategies over the next several years.
In fact, a number of companies in the logistics space have already taken major strides in that direction. One such company is Tennessee-based Kenco Logistic Services, a large logistics service provider.
Kenco recently signaled its commitment to sustainability when it named Deni Albrecht as its first leader of sustainability. Albrecht says his appointment "brings to the forefront a concern that has been in the background for several years." He credits Rogers, who has worked with the company on its sustainability initiative, with helping foster Kenco's culture of sustainability, and he echoes Rogers' broad view of what it entails. "The vision of sustainability in business is almost endless," he says. "It is about doing the right things and doing them efficiently."
Kenco is now working with customers on a variety of projects aimed at reducing energy consumption, transportation costs, and waste, according to Albrecht. "We pride ourselves on partnering with people of like vision," he says. It's not a one-way street, Albrecht adds. While Kenco might offer guidance to a customer looking to trim excess packaging, he says, "we also have some customers showing the way to us."
He cites GlaxoSmithKline Consumer Healthcare (GSK) as an example. Last year, GSK installed 11,000 solar panels on the roof of its Northeast regional distribution center near York, Pa. The company says it expects the array, the largest rooftop system in North America, will generate enough electricity to meet all of the facility's energy needs.
Albrecht admits that some customers still view sustainability as a cost, but he predicts that will change over time. "Since we've started this journey, we're dovetailing with Six Sigma thinking and using the low-hanging fruit approach. We believe we will get a quick buy-in once we show the dollars in acting sustainably," he says.
Making a difference
Another third-party logistics and transportation firm that has made a commitment to sustainability is New Jersey-based NFI. In April, the company launched what it calls "NFI Impact," an initiative aimed specifically at reducing its carbon footprint. In a press release announcing the program, CEO Sidney Brown said, "Running a sustainable business is vital to the health of this company and the environment. ... Fuel conservation, reducing emissions, solar energy, recycling, and building to LEED standards: these are our guiding principles as we move forward and conduct business." "
While the initiative itself is new, NFI's commitment to sustainability is not. The company has been working to cut back on carbon since 2004, when it joined the Environmental Protection Agency's (EPA) SmartWay greenhouse-gas reduction initiative. Today, a small but growing number of vehicles in its truck fleet run on bio-fuels. It is in the process of outfitting the fleet with super single tires, which are more energy efficient than traditional double tires. Engine speeds are capped at 62 mph and idling is limited to five minutes in order to maximize fuel efficiency. The company's sleeper tractors are being equipped with battery-operated auxiliary power units to further reduce fuel consumption and emissions. Most of the fleet's tractors use synthetic oil.
The company has also started its own renewable energy business, NFI Solar, which has already outfitted two of the company's office buildings with solar panels. It intends to add solar panels to those DCs whose roofs are strong enough to support the heavy solar arrays.
Last year, NFI joined the EPA's WasteWise program, which is aimed at reducing solid waste. Management was pleasantly surprised by the results of the company's baseline audit, which showed that its facilities were already doing a great deal of recycling, reports Susanne Batchelor, NFI's senior vice president of marketing, who has lead responsibility for the company's sustainability initiative. It has now upped the ante, giving managers of all 53 of its facilities goals for further reducing waste, she says.
As for what led NFI down this road, Batchelor says it all comes down to social responsibility. The company operates some 19 million square feet of DC space nationwide and has a fleet of 2,000 tractors and 6,700 trailers. "We looked at the company and said, 'We are big enough to make a difference,'" Batchelor recalls. "So we said, 'Let's start doing some positive things.'"
From the ground up
Another company that's decided it's big enough to make a difference is ProLogis. The company, one of the world's largest developers and operators of distribution space, with more than 435 million square feet in North America, Europe, and Asia, aims to be more than just a global leader in industrial development; it aims to be a global leader in sustainable industrial development. To that end, it has set three "environmental stewardship" objectives for itself: to minimize carbon emissions, to minimize the ecological impact of its developments, and to minimize the impact of its own operations.
To show that it's serious about green building, the company seeks outside accreditation for its facilities, obtaining independent verification that its properties meet local standards for environmentally responsible construction. In 2008, ProLogis pledged that every building it constructed in the United States would be built with the intent of earning LEED certification from the U.S. Green Building Council, says Michael Englhard, the developer's senior vice president and director of project management. It seeks similar certifications for its properties in Europe and Asia.
At ProLogis, "building" has come to be virtually synonymous with "green building," according to Englhard. Sustainable development, he says, "is just part of what we do."
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."